Hunter Walker

SEPTEMBER 10, 2024

This makes sense at face value: a) fundraising ranges from being a distraction to a colonoscopy + root canal, b) dilution sucks, and c) they are quantifiable attributes, easy to compare or rate good/bad. Plus, your execs, the rest of your cap table, and your board often will have to deal with this person.

Venture Capital 89

Venture Capital Silicon Valley Memphis Cap Table 89

VC Cafe

FEBRUARY 9, 2011

Know your industry’s standards and keep a controlled cap table. This specific agreement didn’t state whether the 5% was on a fully diluted basis or not. No matter how experienced or well connected an outsider claims to be, ask yourself questions about the other party’s intent.

Technical Review 90

Technical Review Cap Table Due Diligence Non-Compete 90

Up and Running

SEPTEMBER 20, 2021

This is all incorporated into a document called a Cap Table. . A cap table will help you in the strategic management of business decisions. Wondering what a cap table is, its importance, and how you can maintain it to expand your business? What is a cap table? Let’s dive in.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Both Sides of the Table

JULY 25, 2011

Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. To this day I’m still surprised how few CEOs really understand the differences between 2x liquidation preference and a liquidation preference with a 2x cap. Or what “flat spots&# on a cap table are.

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

VC Adventure

OCTOBER 8, 2012

This is typically reflected on cap tables in a completely separate tab to the spreadsheet that shows the debt total by investor and then some kind of interest calculation. The problem, of course, is that their convert is already a part of their capitalization – even though it’s not reflected on the cap table.

Cap Table 93

Cap Table Dilution Equity Deal Structure 93

Both Sides of the Table

OCTOBER 7, 2014

My speculation is that entrepreneurs had more options and wanted to take less dilution so the old $5 million for 33%-40% of your company no longer made sense and on the VC side it made no sense to pay $20 million pre ($25 million post, which implies the VC gets 20% of the company = 5/25). Why the latter? My personal definition?

Cap Table 399

Cap Table Silicon Valley Term Sheet Finance 399

David Teten

JANUARY 19, 2021

That said, Jonathan Bragdon, General Partner, Capacity Capital , points out that Flexible VC terms “twin” well with equity: providing less dilution while still providing investor assistance. . Most Flexible VCs lead rounds and often take 100% of the round to mitigate this risk.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

This is going to be BIG.

JANUARY 18, 2024

Instead of getting hung up on what their better-funded competition was doing, they focused on executing on their near-term goals, then setting new ones, then executing on those, and so on and so on, all the way up to a billion-dollar acquisition with very little dilution taken along the way.

.Net 88

.Net Cap Table Startup Technical Review 88

ithacaVC

DECEMBER 13, 2013

When raising money from investors (angels or VC), it is critical to have a presentable and clean cap table. VCs in particular typically insist on a slug of available options counting in the pre-money share total as they do not want to be diluted later by the issuance of those options. I have posted on this previously.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

keen.io

FEBRUARY 5, 2013

If the company is pre-funding or only has a small friends-and-family seed round, then the numbers should go up from there, based on expected dilution and greater risk.” Assumption: The pre-dilution amount prior to Series A should be approximately double the amount in this post-Series-A chart. Result: A fair offer would be between.8

Salary 50

Salary Equity Startup San Francisco 50

View from Seed

SEPTEMBER 23, 2019

Previous venture firms’ specific involvement on the cap table should be noted here, though. Plus, any other non-standard items here should be called out, too, like non-dilutive grants, as applicable. What not to include is directly stating valuation expectations.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

Both Sides of the Table

FEBRUARY 22, 2011

I understand the appeal of having many VC firms on your cap table. You may feel as I did in 1999 that the more smart people around the table the more intros you’ll have, the more sage advice you’ll receive and the more impressive you’ll seem to outsiders. The Perils of Many. There – the secret is out.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

David Teten

AUGUST 19, 2019

Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. For RBI, return caps of 1.2x-1.8x Limited amount of existing debt and a clean cap table”. At least 12 months of customer history, generally 20+ enterprise customers or 200+ SMB customers. Capital need of up to $1.5M over next 12 months.

Revenue 60

Revenue Technical Review Software Review Equity 60

Board Effect

MAY 10, 2019

Capitalization tables—”cap tables” for those who don’t have time for extra syllables—map the balance of power in a company. If org charts are about people power , cap tables are about money power. In reality, however, cap tables are often far more complex. What is a cap table?

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

The Next Web

OCTOBER 21, 2013

While there are no hard and fast rules, when we make a Series A investment we expect to own around 20% of the company on a fully-diluted basis. This problem is all the more thorny when the angel investors have the right to participate in future rounds and intend to do so in order to protect against dilution. Alarm bells.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

ithacaVC

SEPTEMBER 4, 2011

Here is the latest edition of Finance Fridays from Brad Feld called “Introducing the Cap Table and CTO” Every startup needs someone to be in charge of the Cap Table. When I was General Counsel at a tech company during the 1999 bubble times, I kept the company’s Cap Table.

Cap Table 49

Cap Table Finance Option Pool Warrant 49

ithacaVC

SEPTEMBER 10, 2012

But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” I am not even sure what “undiluted stock” is, but safe to say the person (I will call him Exec X) meant stock that his equity would not be dilutable in terms of ownership. Actually, I got many questions.

Dilution 53

Dilution Employee Cap Table Equity 53

Gust

OCTOBER 8, 2014

My speculation is that entrepreneurs had more options and wanted to take less dilution so the old $5 million for 33%-40% of your company no longer made sense and on the VC side it made no sense to pay $20 million pre ($25 million post, which implies the VC gets 20% of the company = 5/25). Invested Interests cap table venture capital'

Cap Table 136

Cap Table Silicon Valley Term Sheet Non-Compete 136

Hunter Walker

SEPTEMBER 5, 2021

Startup CEOs Should Test Strength of Cap Table Every ~6 Months To Know Where They Stand. I rather see the difference in dilution be used to continue hiring amazing team members going forward than add a few more basis points to my ownership. Go read it and then come back here…. Because it’s better for the company overall IMO.

Cap Table 127

Cap Table Seed Stage Syndication Syndicate 127

VC Adventure

OCTOBER 8, 2012

This is typically reflected on cap tables in a completely separate tab to the spreadsheet that shows the debt total by investor and then some kind of interest calculation. The problem, of course, is that their convert is already a part of their capitalization – even though it’s not reflected on the cap table.

Cap Table 48

Cap Table Dilution Equity Deal Structure 48

Board Effect

MAY 13, 2019

Let’s not waste time listing everything startups could be doing to more effectively manage their cap tables. When it comes to cap table management in startup companies, it’s unrealistic to expect perfection. What does your cap table need to address at each stage of growth? Defining Cap Tables.

Cap Table 40

Cap Table Management Liquidity Event Dilution 40

Hunter Walker

MARCH 14, 2019

All the disruption can be pretty jarring to an entrepreneur, especially in situations where the exiting partner represents the top line on your cap table. You’ll often need the support – both structurally and symbolically – of some other investors on the cap table to make the case for some of the ideas below to work.

Cap Table 109

Cap Table Dilution Silicon Valley Portfolio 109

Hunter Walker

AUGUST 8, 2023

The reality is lots of companies – many of them quite promising – have already undergone, or will be facing, next financings which “clean up” old cap tables. Whatever gets reported is just the tip of the iceberg. Sometimes these are led by outside investors and old ones will just take the impact and walk away.

Portfolio 118

Portfolio Cap Table LP Valuation 118

Haystack

AUGUST 18, 2019

You lose influence as larger investors come into the cap table and start throwing their weight around. Back in 2017, Fred Wilson noted the strategic importance of the seed stage , writing: Seed is really hard. You lose way more than you win. You wait the longest for liquidity. It is where most people start out.

Seed Stage 108

Seed Stage Cap Table Early Stage Malaysia 108

This is going to be BIG.

JUNE 2, 2010

I’m sure you’ll start seeing some rounds that essentially should be B rounds according to what the current cap table looks like, except that there’s a Series A level of progress, and about a million bucks in product overspend that didn’t really lead to a business.

Cap Table 106

Cap Table Seed Stage .Net Venture Capital 106

venturehacks.com

OCTOBER 21, 2010

Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# Update : Check out our $9 cap table which calculates the effect of the option pool shuffle on your effective valuation. share to $1.00/share:

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Feld Thoughts

AUGUST 28, 2015

I didn’t do spreadsheet math to get there – I just figured that the economics of the round ended up with the seed round getting about 33% (the max I think most seed rounds should end up getting) and then take meaningful dilution from there. The CEO committed to doing something here, which I told him I respected.

Cap Table 70

Cap Table Seed Stage Angel Groups Dilution 70

Rob Go

AUGUST 29, 2016

The main reason for this, I think, is that there has been such a proliferation of convertible notes, SAFE’s, and other instruments that it becomes tough for a new investor to feel confident that they fully understand a company’s cap table prior to an investment. This creates a dis-incentive to raise more than you intended.

Post-Money Valuation 52

Post-Money Valuation Valuation Cap Table Term Sheet 52

ithacaVC

APRIL 5, 2011

I am a huge fan of simple cap tables. A cap table is a written record (in Excel, for example) of who owns stock in your company. It should also provide a combined summary so that it is easy to see who owns what % of the company on a fully diluted and converted basis. I am curious to see how it works out.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. Here’s the scenario. It’s not pretty, but it happens.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

Scott Edward Walker

OCTOBER 28, 2014

Because if there is like a 40% dilution in an angel round, I’ve actually said to the founder, ‘do you realize you have already doomed yourself?’” –Ron Conway (at 25:12). We’ve seen a series of interesting companies in the last five years where we simply won’t bid because the cap table is already destroyed.”

Cap Table 67

Cap Table Cofounder Silicon Valley Venture Capital 67

Bryce Dot VC

DECEMBER 22, 2016

We don’t know how many rounds this company has raised, how many other VCs are on the cap table, nor how much the founders own. 5%-10% range is much more likely after the initial round of funding and dilutes rather quickly in successive rounds as reserves for pro rata vary wildly by firm). Through our work on Indie.vc

Founder 40

Founder Cap Table Dilution Valuation 40

Austin Startup

DECEMBER 7, 2017

There are two problems with early stage investing: telling how much a company is worth when truthfully, it is still worthless; and helping early-stage companies protect themselves from over dilution when they are, effectively, worthless. The note converts at a maximum valuation (cap) of $4.5mm. Two sides of the same intractable coin.

Covenant 48

Covenant Cap Table Early Stage SBA 48

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. In this situation, the FFAs are diluted from an ownership percentage, but enhanced economically. Founders often raise money from friends and family and other angels. That is all well and good… and 100% normal.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

www.payne.org

SEPTEMBER 22, 2011

3 Dilution. Those new shares are created out of thin air by the company, and will dilute all of the current stockholders. Since you still have 100,000 shares, your ownership percentage is now dropped to 0.8333% -- you just got diluted. In a startup, dilution happens, and you just need to factor it in. diluted) terms.

Equity 56

Equity Employee Vesting Preferred Stock 56

Bryce Dot VC

FEBRUARY 6, 2017

Founders can trade the fundraising treadmill for the freedom, control and ownership that comes with managing your cap table closely. And it rewards that early, and often painful, focus on revenue and sustainability with less dilution and more optionality. Reliance on revenue keeps them close to their customers.

Cap Table 40

Cap Table Burn Rate Dilution Bootstrapping 40

NZ Entrepreneur

JULY 12, 2018

What happens if they don’t work out after six months, yet they hang around forever on the cap table, through an equity stake they never really earned? Will you both be able to work together? What happens in hard times and when you are working under pressure? My own father had difficulties with partners in his business.

Cofounder 60

Cofounder Founder Vesting Cap Table 60